India’s Gross Goods and Services Tax (GST) collections surpassed ₹1.87 lakh crore in October, marking the second highest monthly collections on record, with growth rebounding to 8.9% in October from September’s 40-month low uptick of 6.5%.
Net revenues, after factoring in refunds, grew at a slower pace of 7.9% to a tad over ₹1.68 lakh crore in October. However, this also marked a recovery from September’s growth rate of 3.9% which was the slowest so far in 2024-25.
Last month’s GST revenues were only eclipsed by the April 2024 collection of ₹2.1 lakh crore. Despite the improved growth figure, GST revenues so far this year continue to undershoot the Budget 2024-25 math, which factored in a rise of about 11% in net revenues.
In October, growth in gross revenues from domestic transactions improved to 10.6% from about 6% a month earlier, while import revenues grew at a much milder pace of 3.9% in October, halving from September’s 8% uptick.
Net domestic receipts in October, from transactions undertaken in September, were up 8.7%, almost double the 4.5% growth recorded in the preceding month.
Overall revenues from GST, prior to refunds, in the first seven months of this year, now stand at ₹12.74 lakh crore, 9.4% over the same period of 2023-24. Net revenues, after refunds, are also up 9% at over ₹11.27 lakh crore, as per official numbers.
Deep variations
Amid the headline improvement in domestic transactions, variations among States deepened significantly relative to the previous month, with a dozen States growing faster than the 10.6% national average growth in domestic revenues, a dozen underperforming that pace, and five States recording a contraction in gross GST receipts from a year ago.
On a year-on-year basis, revenues were flat in Uttarakhand, while they shrank a sharp 33% in Arunachal Pradesh, 8% in Nagaland, and 5% in Manipur, which was a moderate improvement from the 33% shrinkage in the strife-torn State’s GST revenues during September. Himachal Pradesh and Chhattisgarh clocked a contraction of 2% and 1%, respectively, in October.
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Kerala, by contrast, recorded the highest growth at 20%, followed by Gujarat, whose revenues grew 17% after staying flat in September. Four States’ revenues rose 15%, including Haryana and West Bengal, while Maharashtra and Bihar reported a 14% growth in GST receipts.
Among the States that witnessed weaker revenue growth, the poorest performance came from the erstwhile State of Jammu and Kashmir as well as Sikkim, with just 2% growth, followed by a 3% rise in Jharkhand, and just 4% in Tamil Nadu.
“While many large States have recorded an increase above 9%, some of them and many of the smaller States have shown a below average increase, which would be an area of concern for them,” said M.S. Mani, partner at Deloitte India.
Jump in refunds
Refunds to domestic taxpayers jumped 42.8% in October, from about 24% in September, improving for the third straight month. However, export-related refunds of GST collections contracted 2% in October, compared to a 39.2% spike in the preceding month.
Overall refunds were 18.2% higher than last October, slowing for the second successive month. Mr. Mani, however, felt that the refund levels were healthy and indicate stabilisation of the refund process and reduction in rejections due to interpretative issues. In July, refunds had contracted by over 19%.
Vivek Jalan, partner at Tax Connect Advisory Services LLP, expressed concern at the 9% net GST collection growth so far in 2024-25. “This reflects that the economic activity in India needs a push so that the fiscal deficit target can be achieved,” he said, noting that the Budget had penned in a higher growth in GST revenues.
Published - November 01, 2024 04:17 pm IST
